Fannie Mae gets tough on strategic defaulters (foreclosures, insuring)

[bentlebee]

Two out of five homeowners say they would consider walking away from their mortgages if their homes were worth less than what they owed, according to a survey by Trulia and RealtyTrac.....


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Borrowers who walk away from mortgages they can afford to pay – making “strategic defaults” – are running increasing risks that they’ll be penalized for doing so.

Starting in October, Fannie Mae says, strategic defaulters will be disqualified for new Fannie Mae-backed loans for seven years after their foreclosures. Fannie also says it will go to court where it can to recoup outstanding mortgage debt from borrowers who strategically default.

Under a bill that’s passed the House and awaits Senate action, the Federal Housing Administration would be barred from insuring mortgages for those who previously ditched a mortgage they had the ability to pay.

Get-tough policies are forming at the same time that about a quarter of mortgage borrowers owe more than their homes are worth.

Fannie Mae buys about 40 percent of all mortgages and packages them for resale to investors. The FHA insures about 30 percent of home mortgages.

Freddie Mac, which also buys mortgages, says it is examining Fannie Mae’s policy.

To determine if a borrower is in default, Fannie examines whether the homeowner still has access to credit and is paying that debt and others.

Cracking down on strategic defaulters is controversial. Some lenders say it is necessary to stem the tide of homeowners shirking their obligations.

“We need to start treating bad behavior with serious and measureable consequences so that we can get this nation back on its feet,” says Daniel Smith, vice president of mortgage banking at First Place Bank in Livonia, Mich. “Washington needs to come up with a uniform law on this issue.”

Fannie Mae gets tough on strategic defaulters

Great news for all the people who are doing the right thing...let them go after the people who didn't like to deal with lower values, like the rest of us is dealing with and just waiting untill things go back up...I hope when the market mess is over, these calculated defaulters will have to deal with what they thought was so easy to do...